US stock market listings prove innovative financing option for of fast-growing Indian companies

18 February 2008

New York City-based merchant bank Emissary Capital LLC that specialises in handling Indian companies is leading the charge for Indian companies to obtain stock market listings in the US.

Emissary assists Indian companies in raising funds from investors based in the US and Europe in conjunction with a US stock market listing. This turns a fast-growing Indian company into a US public company, with the prestige and capability to raise money from US and European institutional investors.

Emissary says SMEs are a dynamic force in India's robust economy. An overwhelming 95 per cent of industrial units in India fall under this category. India's strength in the information technology sector is well known, but it is India's fast growing manufacturing sector, driven by approximately three million SMEs in sectors ranging from auto components to industrial goods, which is rapidly making India a leading global manufacturing hub.

It seems debt financing is not the only answer for SMEs. There seems to be an across the board consensus that Indian SMEs have not been able to fully tap their potential and keep pace with India's growth because of their inability to access greater sources of financing.

For the vast majority of Indian SMEs, the high domestic interest rate regime (prime rate of 12.75 per cent to 13.25 per cent) is a substantial hindrance to faster growth. Furthermore, the ability to raise debt financing outside India (typically referred to as external commercial borrowings (ECBs) is strictly regulated by the Reserve Bank of India (RBI).

In its statement, Emissary says that the Indian stock markets including the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) have essentially ignored the robust Indian SMEs.